The Blog

European Union and China to boost cooperation in custom controls and tackling counterfeit goods

Algirdas Šemeta, EU Commissioner for Taxation, Customs Union, Anti-Fraud and Audit, will open tomorrow an international conference at the Shanghai World Expo 2010 on building bridges to facilitate trade between China and the EU. The aim of the conference is to explore ways to enhance further customs cooperation between the EU and China, in order to allow a smooth trade flow between both sides while providing citizens with a high level of protection. Securing the supply chain, tackling smuggling (particularly of cigarettes) and protecting intellectual property rights will be high on the agenda. China is the EU’s second trading partner after the USA and its biggest source of imports. The EU is China’s largest export market. Both the EU and China therefore have a real interest in ensuring that safe, genuine and legal products can easily enter each other’s markets. Commissioner Šemeta will spend 3 days in China, discussing key issues related to customs and anti-fraud measures with national authorities and business representatives, and will visit the port of Shanghai to see first-hand how Chinese customs controls operate.

Commissioner Šemeta said:

The booming trade between the EU and China is extremely positive. However, the downside is that we have seen a parallel increase in illegal trade, which must be stopped. Respect of customs rules is essential to protect our citizens and guarantee the free flow of goods between trading nations. This is why we must work even harder on efficient customs cooperation between the EU and China, built on mutual trust and common goals.

EU customs play a crucial role: ensuring the balance between protecting society and facilitating legitimate trade flows. Customs have information on every single import and export that crosses EU borders, and use sophisticated methods to control these goods. China is the single most important challenge for EU trade policy. Cooperation between customs authorities on both sides is essential to facilitate this trade.

Supply chain security

Good trade relationships must be based on the trust that both sides are fully committed to ensuring a high level of security in the goods they export. The EU and China have been working for a number of years to solidify this trust in the area of customs. Among the important measures taken was the signing of a Customs Co-operation and Mutual Administrative Assistance Agreement and the establishment of the EU-China Joint Customs Co-operation Committee (JCCC), to promote cooperation and information exchange, and to help find common solutions to problems encountered in this field.

An important issue which the Commissioner will be discussing with his counterparts in Shanghai is the expansion of the Smart and Secure Trade Lanes (SSTL) pilot project that was launched in 2006. This landmark project tests the security measures applied to a container and supporting technology (e.g. smart seals) throughout its entire journey from start to finish, as well as promoting data exchange and mutual recognition on key customs issues. The first phase involved ports in the UK and Netherlands, as well as the Chinese port of Shenzhen. The SSTL Pilot has been extremely successful in developing understanding, trust and cooperation between the participating customs administrations, as well as progressing the work on mutual recognition of the business partnership programmes on both sides. The EU and China are now preparing to launch the next phase of the SSTL, with participation extended to include Belgium, France, Germany and Italy, as well as the port of Shanghai. The long term goal of this project is to facilitate agreement on the mutual recognition of security measures, control results and authorised economic operators.

Intellectual property rights

The protection of Intellectual Property Rights (IPR) and the fight against counterfeiting and piracy is key to ensuring the success of EU-China economic and trade relations. In January 2009, the EU and China signed an agreement on an ambitious Action Plan for closer customs cooperation between the EU and China on IPR enforcement. It aims to strengthen customs controls against counterfeit and piracy in goods traded between both sides (see IP/09/193). Within this Action Plan, both sides have focussed on establishing and implementing a customs network on IPR protection, as well as developing activities in key areas such as data exchange, sharing good practices and working with industry on this issue. During the Commissioner’s visit to China, both sides will discuss extending this Action Plan until the end of 2012, with a view to ensuring its proper and successful implementation, and will look at ways in which activities under the Plan can be improved.

Tackling cigarette smuggling

Commissioner Šemeta will also discuss how EU-China cooperation can be stepped up in terms of stopping the illegal trade in cigarettes. Counterfeit and contraband cigarettes pose a huge problem for the EU: over 5 billion illegal cigarettes were seized by EU customs last year, and this is perhaps only 5-10% of what is suspected to be the real volume of the trade. The EU and Member States lose up to 10 billion euro in unpaid taxes every year from the illicit tobacco trade. Moreover, the money from counterfeit and contraband cigarettes feeds organised crime and terrorism, which affects countries all over the world. EU-China cooperation on cigarette smuggling takes place within the framework of the Mutual Assistance Agreement signed by both sides in 2004 (see IP/04/599). Since 2008, OLAF (the EU’s Anti-Fraud Office) has had a liaison officer in Beijing to work with Chinese Customs and other authorities in tackling cigarette smuggling. Close cooperation, and the exchange of information and intelligence on suspect consignments, is essential in targeting operations and improving controls against illegal cigarettes.